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"We are confronted by the most unusual set of circumstances that I have experienced in my lifetime," said Henry Kaufman, the fabled Wall Street economist best known by his Cassandra-like nickname, Dr. Doom. "We are in no man's land when it comes to economic policies to get the U.S. and Japan out of their doldrums." Kaufman's tone and watery eyes seemed to reflect a genuine sadness that no "economic thinker" has emerged who can galvanize our collective imaginations and show us the way out.

I was with good reason sitting in Dr. Kaufman's Madison Avenue rooms, home to both his private family office and his public consulting firm, Henry Kaufman & Co. Some days it feels to me as if Eeyore on Adderall has gained control of America's newsroom. If I am to be depressed, I decided, let me at least be melancholic with the best in the business. That seemed eminently more Penta's style.

So I respectfully paid Dr. Kaufman a visit, taking my seat before a work by the American painter, Philip Howard Evergood. In this Depression-era painting, One Meatball, an emaciated diner in a restaurant eats a single meatball as a waiter in the background clutches his head in a way reminiscent of Edvard Munch's The Scream.

One Meatball, by Philip Evergood, set the mood for Henry Kaufman's take on the state of the world.
Jenna Bascom for Barron's

The mood was suitably set, in short, when the good doctor came through the door. For those whose memories don't go back that far, Henry Kaufman made his name as the late Salomon Brothers' chief economic thinker, his sober pronouncements hugely affecting bond markets and economic policy in the 1970s and 1980s. His gift: He delivers bad news in such a clear-eyed and erudite way that the bitter pills slide easily down the gullet, so different from the pipe-burning bromides pushed by the shrieking hairdos of television.

The courtly economist who fled Germany in the 1930s obligingly ran down the nature of the globe's festering malady. "There is a halo around the emerging nations that is not deserved," he said. "China isn't working. India has significant problems."

Europe, Japan—the doctor's litany of infectious diseases ran on. We have a "subdued economic recovery" in the U.S. where only "100 or so large companies" are cash-rich. Small and medium-size companies, the backbone of the economy, have little "access to credit." Even the good news—historically low interest rates—is in Dr. Kaufman's narrative the woeful story of an opportunity lost. "Few investors have benefited from this steep decline in interest rates," he said.

Kaufman thinks bond investors expected a robust post-2009 recovery. In that scenario, the U.S. government's heavy borrowing requirements would have crowded out the private sector, which in turn would have quickly led to inflation and higher interest rates. That's how investors positioned themselves. But the expected didn't happen. The robust growth never arrived, the private-sector borrowers never re-entered the credit markets in a meaningful way, and so rates unexpectedly fell further. Refinancings have helped only holders of large home loans, big business borrowers, and the U.S. government.

OK. I was thoroughly depressed. But just when I thought I might open up a vein and bleed out all over his carpet, Dr. Kaufman subtly turned the timbre of our talk, not through false hope, but through his dry-eyed look at the world.

He said it was important to note that "much in financial markets and in life is comparative." So while our politicians on both sides of the aisle continue to fail us—"I don't think we can just cut taxes; we all have to make sacrifices"—the U.S. is still "much better off than the EU and Japan. Our problems are not as great as China's. In China, you can't even be sure of the quality of the statistics."

America's entrepreneurial energy is still percolating below the surface of our anemic economy, ready to unleash a new generation of technology-driven products that we can't at the moment foresee. Kaufman urged Penta's readers to not be carried away by the extreme pictures that tend to show up most frequently in the short-term and long-term scenarios. An example are the U.S. government's deficits, which have to be addressed, but are not in the short-term the "Sword of Damocles" the pundits would have us believe. "Try to keep an intermediate view," he said. "And stay with quality." We couldn't have said it better.

A version of this column appeared on Aug. 31 on Barrons.com.

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